sales Our sales <strong>TVK</strong> polymer sales distribution in <strong>2010</strong> LDPE 9% HDPE 55% PP 36% Our businesses Demand has stabilized in our markets and we improved our sales performance in the region. We developed our market position in Central Europe, in line with our objectives set in our sales and marketing strategy. We were able to improve our sales figures and price levels in the post crisis environment. In <strong>2010</strong> quoted polyolefin prices have raised approximately by Euro 200, except HDPE. However currency rates have negatively impacted our profit generation in <strong>2010</strong>. We kept polymer inventories at low level in <strong>2010</strong> in line with our strict cash-flow management principles. Besides exploiting our favourable geographic location in Central Europe we improve our competitiveness in the field of logistics services and sales support, product development and costumer relations, giving bigger focus to our understanding of Central-European market specifics. In line with our sales focuses, we sold 24 ktons more polymer in the Central European markets. In <strong>2010</strong> the total polymer production exceeded the preceding year’s volume by 4% and amounted to 751 ktons. Polymer product sales was 752 ktons, which is 15.2 ktons higher than in the previous year. Total sales contracted by 3% in LDPE (-1.9 ktons) and by 2.6% in PP (-7.3 ktons) products, while there was 24.5 ktons increase in the HDPE product sales. Highlights We develop our products by continuously examining customer requirements. We are out for delivering high quality services and product information related to our products in order to satisfy customer needs. We permanently monitor and regularly communicate the health, safety and environmental (HSE) effects during the life cycle of our products and production processes. Tailor made products were launched and we are working on further product developments with higher added value. It is our aspiration to integrate product liability into each section of the life cycle. The net income from polymer sales amounted to HUF 226 billion in <strong>2010</strong> that represents HUF 57 billion improvements in the sales income compared to the previous year, due to the positive effect of the higher sales volume and quoted polymer prices. Domestic sales have increased by 2.3 ktons and the export volume by 12.9 ktons, representing 2% growth of total sales volume from the preceding year. Export share was 74% (559.3 ktons) of total polymer sales, whilst the domestic market proportion was 26% (192.2 ktons). Our proprietary distribution network, which we have been operating successfully for several years covering several European countries, has been instrumental in achieving these results. We have offices in Austria, France, Poland, Germany, Italy, the Ukraine and Romania. Our foreign trading subsidiaries are engaged in selling the products of both <strong>TVK</strong> and the MOL Group member Slovnaft Petrochemicals. By improving our customer portfolio, the ratio of sales to non-core destinations reduced from 9% in the previous year to 7% in <strong>2010</strong>. We operate four selling points in Hungary in order to enhance the selling towards middle- and smaller size enterprises. We continued to implement the tactical elements of our sales and marketing strategy successfully: we improved our market intelligence and analyses and moreover we are developing a new portfolio of sales services to strengthen customer loyalty. We have focused on the improvement of our sales channels efficiency and we continued to develop our product portfolio in response to the outcome of permanent analyses. We laid special emphasis on direct customer communications. Outlook In the post-crisis environment, <strong>TVK</strong> can benefit from its central position in the landlocked markets of Central Europe where the demand for plastics is rapidly growing. On the basis of our integrated operation and actively managed product and customer portfolio we are out for building our position in the regional markets. In the forthcoming years our prime objective is to further improve customer reputation both in Hungary and in the countries of Central-Europe. Competition has increased in Europe, since Middle East cargoes arrive to the continent and small scale polymer producers restarted their production capacities in the region. We have made numerous efforts in order to offset the unfavourable changes. In addition to efficiency increase and strict cost control, we are focusing to firm our competitive position in our markets, continuing to develop our business and managing proactively our product and customer portfolio. We are elaborating a new portfolio of service packages, to develop quality of our sales services. As the polymer markets of Central Europe have greater growth potential than the European average, our sales strategy continues to focus on exploiting our favourable geographic location. Besides, we intend to strengthen our presence on some key Western European markets. In <strong>2010</strong> the sales volume also proved, that there are further growth prospect regarding our main activity and markets. Our future goals • Maintain regional leadership in polymer production. • Retain and build the reliable and stable customer base, by laying more emphasis on customer support and further improving customer loyalty. • Manage customer portfolio actively. • Develop product portfolio according to market requirements. 24 <strong>TVK</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2010</strong> 25
Financial and Financial and operational performance performance Financial and operational performance 26 <strong>TVK</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2010</strong> 27
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